Share Retention Agreements are crucial instruments in Indian corporate governance, particularly used in scenarios where maintaining stable shareholding is essential for company operations or strategic purposes. These agreements are commonly implemented during corporate restructuring, IPO lock-in periods, joint ventures, or when key employees receive equity stakes. The Share Retention Agreement serves to protect company interests by ensuring key shareholders remain invested for specific periods, thereby maintaining business continuity and stakeholder confidence. Under Indian law, particularly the Companies Act, 2013, such agreements must be carefully drafted to ensure enforceability while balancing shareholder rights with company objectives. The document typically includes detailed provisions on retention periods, transfer restrictions, compliance monitoring, and enforcement mechanisms, making it essential for companies seeking to maintain strategic shareholding structures or fulfill regulatory requirements.
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Key Requirements PROMPT example:
Share Retention Agreement
"I need a Share Retention Agreement for our tech startup in Bangalore, requiring three founding shareholders to retain 75% of their shares for 3 years from January 2025, with permitted transfers only to immediate family members."
1. Parties: Identification of all parties to the agreement, including the shareholder(s) subject to retention requirements and the company
2. Background: Context of the agreement, including the company structure, reason for share retention requirements, and any relevant corporate events
3. Definitions: Key terms used throughout the agreement, including 'Retention Period', 'Retained Shares', 'Transfer', etc.
4. Share Retention Obligations: Core obligations regarding the retention of shares, including the number/percentage of shares to be retained and duration
5. Lock-in Period: Specific timeframe during which shares cannot be transferred, sold, or encumbered
6. Permitted Transfers: Circumstances under which transfers may be permitted despite retention obligations (e.g., to family members, affiliated entities)
7. Compliance and Reporting: Requirements for periodic declarations and evidence of continued share retention
8. Events of Default: Circumstances constituting breach of the agreement and their consequences
9. Remedies: Available remedies in case of breach, including specific performance and damages
10. Term and Termination: Duration of the agreement and circumstances for early termination
11. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for dispute resolution
1. Tag-Along Rights: Optional section for agreements where other shareholders are given the right to join in any permitted share sale
2. Drag-Along Rights: Optional section where majority shareholders can force minority shareholders to join in a sale
3. Share Pledge Restrictions: Additional restrictions on using shares as collateral, relevant when shares need to remain unencumbered
4. Put and Call Options: Optional rights for forced purchase or sale of shares after the retention period
5. Professional Engagement: Requirements for continued professional involvement with the company, relevant for employee-shareholders
6. Confidentiality: Additional confidentiality obligations, particularly relevant for agreements with sensitive corporate information
7. Non-Competition: Restrictions on competing activities, relevant for key shareholders who are also business operators
1. Schedule 1 - Share Details: Details of shares subject to retention, including share certificate numbers and shareholding percentage
2. Schedule 2 - Shareholder Information: Detailed information about the retaining shareholders, including their holdings and contact details
3. Schedule 3 - Permitted Transfer Procedures: Detailed procedures and documentation requirements for permitted transfers
4. Schedule 4 - Compliance Certificate Format: Template for periodic compliance reporting by shareholders
5. Appendix A - Board Resolution: Copy of board resolution approving the share retention agreement
6. Appendix B - Shareholders' Resolution: If required, copy of shareholders' resolution approving the arrangement
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Relevant Industries
Technology
Manufacturing
Financial Services
Professional Services
Healthcare
Real Estate
E-commerce
Retail
Telecommunications
Energy
Infrastructure
Education
Media and Entertainment
Relevant Teams
Legal
Corporate Secretarial
Compliance
Finance
Corporate Governance
Board Secretariat
Shareholder Relations
Risk Management
Executive Leadership
Investment Relations
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Company Secretary
Legal Counsel
Corporate Lawyer
Compliance Officer
Board Director
Managing Director
Equity Partner
Investment Manager
Corporate Governance Officer
Shareholder Relations Manager
General Counsel
Business Development Director
Chief Operating Officer
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